Tax Season Update

Tax changes that have impacted us and clients the most this year, are the due date shuffles of C Corporations being moved from March 15 to April 15, Partnership returns are now due March 15 instead of April 15 and anything to do with the Affordable Care Act.

We routinely prepare four times as many Partnership Returns as C-Corp Returns. In addition, many of the C Corporations that we prepare, are on fiscal years that end June through October. So this due date change shifted our work load up by 30 days, which is a big deal in a ten week season! I’m sure that our clients with partnership interests will be more prepared next year and so will we.

The Affordable Care Act

President Trump instructed the IRS to lessen the ACA burden on taxpayers to the extent they can and the IRS responded with something I’ve never seen in thirty-one years in this business, “the option or election to NOT report something.” Two weeks after President Trumps letter to the IRS, I received an email notification from the IRS stating that they would no longer reject electronically filed tax returns that failed to answer questions about health insurance, the Health Exchange or ACA.

My software people reacted quickly. There is a section where we used to have to put a Code 1 or Code 2. Now we have a Code 3, which simply means “I choose not to report health care status.” Here is the scoop.

To shut off the ACA penalty calculation, and to leave the health coverage checkbox blank on Form 1040/1040-A/1040-EZ, enter a 3 in “3=taxpayer chooses not to report health care status (set penalty to zero). The program will still compute the Premium Tax Credit (PTC) and repayment of advance PTC, if applicable.

A recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden. Consistent with that, the IRS has decided to make changes that would continue to allow electronic and paper returns to be accepted for processing in instances where a taxpayer doesn’t indicate their coverage status. In compliance with the IRS, taxpayers can e-file their return without indicating if they had health care coverage last year.

However, the executive order does not change the current ACA rules that are in place and taxpayers remain required to follow the current ACA law and may receive follow-up questions and correspondence from the IRS if they file a return that doesn’t indicate their health coverage status.

One more time, in 31 years I’ve never seen the IRS give taxpayers the option of reporting anything.